Monday, May 16, 2016

The Amway Numbers?

One of the things Amway IBOs are taught is to ignore facts, or to ignore numbers. I believe this is because the numbers are not pretty when you take a business like approach to the math behind the Amway business, for most IBOs. It is why upline teaching often "evolves" into things such as Amway saves marriages, or Amway makes you a nicer person, or that Amway is not about money, it is about friendships. That is a load of garbage. Business is about making a profit. If you hear some of these lines from your upline, it should be a red flag. Upline may also feed you other deceptive lines such as an IBO being successful because they showed up at a function, or because they just signed up for standing order. These are all just false lines to encourage an IBO who is not making money.

When you take a good look at the Amway presentation, the majority of IBOs are at the 100 PV level. At that level, they are spending about $300 monthly to reach 100 PV and for their efforts, they receive approximately a $10 check from Amway. Most IBOs will be encouraged to participate in some kind of system, often consisting of voicemail, websites, cds, books, seminars and other meetings. MOST IBOs will not recoup enough cash to cover any of these expenses, let alone all of them. At a glance, the system expenses may appear nominal such as $6 for a cd, $6 for an open meeting, $100 to $125 for a major function, $12 for a book. It is how upline gets you involved, and then after a while, an IBO starts to notice the negative cashflow and then a tough decision needs to be made. Either quit and cut the losses, or press on hoping that the system will eventually deliver on its promises.

What most IBOs don't notice, is that less than one half of one percent ever reach platinum. A fraction of one percent! And in many cases, platinums might break even or even suffer losses! So why would IBOs want to work so hard to reach platinum? They have less than a 1% chance of reaching that level. They have a tiny chance of maintaining that level, and they are still unlikely to earn any significant income at that level. A stody done by an attorney general in Wisconsin (Bruce Craig) revealed that platinum level IBOs averaged a net loss of about $900 annually. While Amway defenders will decry that the study is a bit dated, I will say this: The basics of the Amway business has not changed since that study was done, AND there are actually more system expenses today than there were back then, thus platinums may actually be losing more money annually than before. While not all platinums will lose money, I believe hard core dedicated platinums would stand to lose money.

As an IBO, I hope you are tracking your expenses versus your income. Most IBOs will see a negative cashflow month after month. Even though the Amway business is often promoted as low or no overhead, the system expenses (overhead) eventually begin to add up. Beware and please follow the numbers.


Anonymous said...

If Amway were a charity or a non-profit, negative cash flow would be expected. But Amway promotes itself as a "business." What bloody business has a negative cash flow, month after month?

If a man has a hobby or avocation that he practices, he does it out of interest and love, and not for profit. He'll cheerfully accept a money loss. And it is certainly true that most businesses operate at a loss at the beginning, when they are getting set up and organized. But the entire structure and system of Amway is geared to GENERATE continuous financial losses in the lower-level IBOs!

And yet so many of these IBOs (99% of them!) go on losing money month after month, as if Amway were their "hobby." It's just not rational.

Joecool said...

Good observation. I might add that Amway is promoted as having a low overhead, thus the possibility of making a profit quickly. Then when IBOs have losses, the upline will mention hot businesses often don't profit right away. Sorry, you can't have it both ways.

In Amway, the vast majority must fail because the system is designed that way.